2022 (6) TMI 1527 - AT - Income Tax

Assessee fails to prove source of jewellery and equity investments, additions under Section 69 upheld

Sh. Pawan Kumar Jaggi, Versus ACIT, Central Circle-25, New Delhi And (Vice-Versa)

ITAT DELHI dismissed most grounds raised by assessee regarding unexplained investments. The tribunal upheld additions for unexplained jewellery weighing ... Unexplained jewellery - Addition on substantive basis at the hands of the assessee - HELD THAT:- While deciding the issue in the first round in case of assessee’s wife Commissioner (Appeals) held that out of jewellery weighing 1046.90 gms, jewellery weighing 488.84 gms was owned by the assessee. The aforesaid decision of learned first authority was also upheld by the Tribunal [2013 (10) TMI 1601 - ITAT DELHI]. It is to be noted, after examining the facts and evidences brought on record thoroughly, learned Commissioner (Appeals) has recorded a factual finding that jewellery worth of Rs.1,86,100/- representing 211.46 gms stands explained. Whereas, Commissioner (Appeals) has recorded a categorical finding that the assessee could not file any evidence in respect of source of acquisition of jewellery weighing 221.44 gms. Even, at this stage also, the assessee has not brought any material to explain the source of investment in jewellery weighing 221.44 gms. Thus, in absence of any contrary material brought on record by the assessee to point out any error in the factual finding of learned Commissioner (Appeals), we do not find any reason to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed. Unexplained investment in equity shares - As after examining the facts and materials on record, including the seized materials, he has given a categorical finding that the investment in shares not reflected in the records of the assessee works out to Rs.1,45,904/-. The aforesaid factual finding of Commissioner (Appeals) remains uncontroverted before us. Unexplained deposit in foreign bank accounts - As could be seen from the observations of Commissioner (Appeals), he has given a factual finding that there is no evidence with the Revenue to prove that the deposits made in the said bank account was to the tune of Rs.50 lakhs. However, in the same vein, he has directed the AO to make necessary inquiry regarding the deposits made in the same bank account and subject to such inquiry sustained the addition to the extent of Rs.25 lakhs while deleting the balance amount of Rs.25 lakhs. Commissioner (Appeals) has given a categorical finding that the assessee had not disclosed the allowance amount of 4000 GBP received from Ms. Thiara. No material has been brought before us to controvert the factual finding of learned Commissioner (Appeals). Unexplained life insurance premium paid abroad - This issue was decided against the assessee by the Tribunal in earlier round of litigation which was accepted by the assessee. That being the factual position on record, this cannot be a subject matter of dispute now. Undisclosed income of the assessee based on seized material As observed by Commissioner (Appeals) in the impugned order, assessments in case of the concerned entities are pending due to stay granted by Hon’ble Delhi High Court. Thus, learned Commissioner (Appeals) while deleting the additions at the hands of the assessee, has observed that additions, if any, has to be considered in the case of M/s. Seasons Creation Pvt. Ltd., M/s. Mela Ram Jaggi & Sons and M/s. Duke Hosiery. In our view, the aforesaid decision of learned Commissioner (Appeals) being in conformity with the direction of the Tribunal in the earlier round of litigation, no interference is called for. Accordingly, this ground is dismissed. Addition on account of unexplained foreign travel - As decided by CIT it is apparent from the submissions made and records produced before me that the averment of the revenue, that no details were filed, is not factually correct. The identity of and confirmation from Mr. B S Thiara regarding giving GBP 4000 was filed not only before the CIT(A) but also before the AO during the subsequent assessment proceedings. No verification has been made nor any evidence adduced or reasons cited by the revenue to contradict the evidence filed by the appellant. Therefore, the addition made cannot be sustained. Also Since the source of the purchase of FC is from these firms, the addition cannot be sustained in the hands of the appellant and is, accordingly, deleted. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include: Whether the addition of Rs.90,000/- on account of unexplained jewellery was justified. Whether the addition of Rs.1,45,904/- towards unexplained investment in equity shares was warranted. Whether the addition of Rs.27,80,000/- made on account of unexplained deposit in foreign bank accounts was appropriate. Whether the addition of Rs.11,76,300/- on account of unexplained life insurance premium paid abroad was valid. Whether the deletion of additions made by the Revenue, including those related to unexplained jewellery, foreign travel expenses, and investments in shares/debentures, was justified.ISSUE-WISE DETAILED ANALYSIS1. Unexplained JewelleryThe relevant legal framework involves the provisions of the Income-tax Act, 1961, particularly section 158BC, which deals with search and seizure assessments. The Court examined the facts and evidence, noting that the jewellery weighing 1046.90 gms was seized, and the Assessing Officer made additions on both substantive and protective bases. The Tribunal found that the assessee could not provide evidence for jewellery weighing 221.44 gms and upheld the Commissioner (Appeals)'s decision to add this amount substantively to the assessee's income.2. Unexplained Investment in Equity SharesThe legal framework again involves section 158BC. The Court reviewed the evidence, including the wealth tax return for 1992-93, and found that the unexplained investment in shares amounted to Rs.1,45,904/-. The Tribunal upheld the Commissioner (Appeals)'s decision to restrict the addition to this amount, as the assessee did not provide contrary evidence.3. Unexplained Deposit in Foreign Bank AccountsThe legal framework includes sections 158BC and 143(3). The Tribunal noted that there was no evidence to support the Rs.50 lakh deposit claimed by the Revenue. The Commissioner (Appeals) directed further inquiry and sustained an addition of Rs.25 lakhs, with Rs.2,80,000/- separately taxed as the allowance received by the assessee. The Tribunal found no reason to interfere with this decision.4. Unexplained Life Insurance Premium Paid AbroadThe Tribunal noted that this issue was previously decided against the assessee by the Tribunal and accepted by the assessee, thus not subject to further dispute. The Commissioner (Appeals) followed this precedent, and the Tribunal upheld the decision.5. Revenue's Appeal on DeletionsThe Tribunal addressed various grounds raised by the Revenue, including deletions related to unexplained jewellery, foreign travel expenses, and investments in shares/debentures. The Tribunal found that the Commissioner (Appeals) acted in accordance with the Tribunal's directions in the first round of litigation, particularly regarding assessments related to M/s. Seasons Creation Pvt. Ltd., M/s. Duke Hosiery, and M/s. Mela Ram Jaggi & Sons. The Tribunal upheld the Commissioner (Appeals)'s decisions to delete these additions from the assessee's hands.SIGNIFICANT HOLDINGSThe Tribunal's significant holdings include: On unexplained jewellery, the Tribunal upheld the addition of jewellery weighing 221.44 gms, as the assessee failed to provide evidence of acquisition. On unexplained investment in equity shares, the Tribunal upheld the addition of Rs.1,45,904/- as the unexplained amount, based on the Commissioner (Appeals)'s findings. On unexplained deposits in foreign bank accounts, the Tribunal supported the Commissioner (Appeals)'s decision to sustain Rs.25 lakhs and Rs.2,80,000/- as taxable, pending further inquiry. The Tribunal confirmed that the issue of unexplained life insurance premium paid abroad was not open for further dispute, as it was previously decided and accepted. The Tribunal upheld the deletion of various additions by the Commissioner (Appeals), finding them consistent with prior directions and lacking contrary evidence from the Revenue.The Tribunal concluded by dismissing both the assessee's and the Revenue's appeals, maintaining the decisions of the Commissioner (Appeals) across the various issues presented.